Utility commission proposes rate hikes
SAN FRANCISCO (AP) – California’s top power regulator proposed increases of up to 46 percent in electricity rates Monday for some 10 million homes and businesses, hoping to stave off blackouts this summer by encouraging conservation.
Loretta Lynch, president of the Public Utilities Commission, said rates for customers of two cash-strapped utilities should increase by an average of 3 cents per kilowatt hour.
The increase later would be subject to a tiered rate system designed to protect consumers who conserve, while charging heavy users more, Lynch said.
”Electricity hogs will have to pay more for the electricity they use, especially over the summer,” Lynch said. ”The most important aspect of any tiered rate proposal is to motivate conservation.”
The current residential rate for electricity alone averages 7.5 cents per kilowatt hour for customers of Southern California Edison Co. and 6.5 cents per kwh for customers of Pacfic Gas and Electric Co. – working out to a 40 percent increase for Edison customers and 46 percent for PG&E customers.
But power bills actually are much higher. The basic rates for electricity are bundled with transportation costs, transmission costs and conservation programs, making the average price of a kilowatt hour closer to 12.5 cents for Edison customers and 10.5 cents for PG&E customers.
The proposed increase would raise the average Edison residential bill by $16 a month -from nearly $70 to $86, a company spokesman said. The increase would raise the average PG&E residential bill by $15 a month -from $52 to about $67, said Ron Low, a company spokesman.
The higher rates could go into effect as early as Tuesday, when the PUC meets. They come on top of the 9 percent to 15 percent rate increase the PUC approved in January, and an additional 10 percent increase already scheduled for next year.
At a speech in Los Angeles, Gov. Gray Davis said he is not in favor of electricity rate hikes, but has no power to order the PUC to maintain current rates.
”It’s still my expectation that we can work within the existing rate structure,” Davis said. ”As governor, I have not decided there should be a rate increase, and as governor, I have not decided that tiered pricing makes sense.
”I can’t order or direct an independent body,” added Davis, who appointed three of the five commissioners at the PUC. ”I’ve not given any advice to them on the subject of a rate increase.”
Davis administration officials told several key Assembly members Friday that the state’s power buying for credit-poor Edison and PG&E could cost $23 billion by the end of next year – far more than lawmakers and Davis estimated when they approved legislation authorizing the state’s power purchases.
At the time, they projected they would need $10 billion in revenue bonds to buy power for the two utilities over a decade. The bonds will be repaid by the utilities’ customers over several years.
Consumer advocates said the PUC, Davis and the Federal Energy Regulatory Commission are not doing enough to bring down exorbitant rates charged by out-of-state power generators.
”The generators should be forced to take lower prices,” said Michel Florio, a senior attorney for The Utility Reform Network, who added that the state should use its powers of eminent domain to seize the power plants and run them itself.
”If the governor isn’t willing to seize the power plants, then maybe we will,” Florio said, adding that his organization and other consumer groups have been considering statewide initiatives to remedy the state’s failed attempt at deregulation.
PG&E and Edison say they’ve lost more than $13 billion since last summer because caps on retail electricity rates have kept them from passing on high wholesale electricity costs. The caps are part of California’s 1996 deregulation law.
On the Net:
California Public Utilities Commission: http://www.cpuc.ca.gov
Pacific Gas and Electric Co.: http://www.pge.com
Southern California Edison Col: http://www.sce.com
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